Tuesday, March 10, 1992 - Page updated at 12:00 AM

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Stores Don't Feel Neighborly To F&N -- Bankrupt Anchor Is Just Dragging Them Down, Too, Say Mall Retailers

Imagine. Your once-rich neighbor suddenly has big-time money problems.

Though he tries to put a good face on his plight, the difficulties are obvious. The trappings of wealth have slowly disappeared, replaced by discount-store items. Things are ominously quiet; all those people who once visited regularly just stopped coming by.

That's the position some retailers unlucky enough to be located next to Frederick and Nelson's find themselves in these days. The same picture emerges around Frederick's stores on the Eastside, downtown, and in the South and North Ends.

"I can't wait for them to be gone. They're a joke," said Bill Hatch, owner of The Short Story, a women's apparel store in Bellevue Square.

"I wish they would just close and leave," said Nahid Abedini, owner of Leather Cove, a leather coat store at the mall. "The liquidation sale is phony. Half the stuff in there is stuff K mart would sell," she said.

Linda Stribling, general manager of Everett Mall, said shops near that center's F&N have had problems, too. "Having the anchor dark presents challenges to us as management and has had a significant impact" on mall traffic," she said.

The mall has put on special promotional events, like a fashion show, to try to keep customers interested in the nearby shops, while the Everett Frederick's is converted to a Mervyn's. Mervyn's took over Frederick's Everett lease late last year.

The impact of Frederick's downtown store has not been as extreme. Retail sales downtown have generally been strong, posting an 8 percent increase in last year's fourth quarter, compared to the same 1990 period, said the Downtown Seattle Association.

But Jim Mance, manager of Westlake Center, home to 80 specialty shops across the street from Frederick's, said that if the downtown F&N closed, it would be "devastating" for the mall.

Meanwhile, small shopkeepers near Frederick's Bellevue store are caught in a bind. They're located in one of the Puget Sound's most-lucrative malls. But, next door, as Frederick & Nelson's problems deepened, the old crowds have slowly dissolved.

Over the past year, as Frederick's sank into bankruptcy, its sales at the big Eastside shopping center have plummeted by 40 percent, according to court documents.

At the same time, sales for shops adjacent to F&N have dropped an average 15 percent, despite a slight increase across the whole mall.

The drop has been even more dramatic for some stores in the Frederick's wing at Southcenter. In the month after Frederick's September Chapter 11 bankruptcy filing, Video Concepts' sales dropped 50 percent from the previous October and another 40 percent in November.

"We live and die with Frederick's," says Bob Labor, manager of the home-electronics store.

Business has dried up for other retailers at Southcenter, and many store managers are anxious to see another department store replace Frederick's.

"A lot of people wish they would just close their doors and die with dignity," says Steve Kirkpatrick, manager at Pacific's Big & Tall Shop, at Southcenter.

At Bellevue Square, one Frederick's neighbor - Le Petit Bateau - has closed down. Another, Bangkok Express, is considering doing the same.

And other stores near the big retailer are moving, or are considering moving, to other locations.

"We have not experienced a decline in sales because of (Frederick's problems). But had there been someone else in there, we could have been much stronger," he said.

One of the key reasons for the popularity of a shop in a major mall is the crowds attracted by anchor tenants like The Bon Marche, Nordstrom or, until recently, Frederick's.

Shoppers drawn to the selection provided by the bigger store frequently drift into nearby shops. When times are good at the big store, neighboring shops benefit. But when times are bad, they suffer.

James Melby, chief financial officer of Bellevue Square Managers Inc., which operates the mall, said in a court document, that pattern has played itself out with Frederick's. "When F&N's sales began to slip (in the third quarter, 1990), the performance of the adjacent mall shops also deteriorated." While the average drop has been 15 percent, some have felt an even deeper impact. At The Short Story, sales have dropped "20 to 25 percent" in that time, said Hatch.

Melby's statement was made to support Bellevue Square's attempt to force Frederick & Nelson out of the mall as soon as possible, to make way for another store. A bankruptcy court ruled that the retailer's lease would run out on May 18.

A number of major retailers, including The Bon, Sak's Fifth Avenue, Macy and Gottschalks have expressed interest in the Bellevue location.

Melby also said that, when Frederick's cut back on its hours in early 1991, "sales at the adjacent shops began to fall at an accelerated rate, while the sales of the rest of the mall experienced modest growth."

He added that Frederick's physical location in Bellevue Square has hurt other stores. F&N's store serves as a key entry point for the mall. When the store is closed, nearby merchants are left out in the cold.

Copyright (c) 1992 Seattle Times Company, All Rights Reserved.


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